1. Field of the Invention
The present invention relates, in general, to computer tools for analyzing and comparing data. More particularly, the present invention relates to analyzing and comparing financial data for stocks, stock options, bonds, and the like on a computer terminal.
2. Relevant Background
Investment options, such as stock options, are traded on many exchanges throughout the world and are a vital part of today's economic landscape. Simply stated, an option is the right to either buy or sell an underlying asset at a particular price and time in the future. Generally, investors purchase options to profit from or protect against an anticipated change in price of the underlying asset.
Every option has an associated strike price and an expiration date. The strike price, also referred to as an exercise price, is the price at which the underlying asset can be either bought or sold. Generally, if the option is a call option, the option holder has the right to buy the underlying asset at the strike price until the expiration, or maturity, of the option. If the option is a put option, the option holder has the right to sell the underlying asset at the strike price until the expiration of the option. The expiration date establishes the duration of the option. If an option holder does not exercise the option (by buying or selling the underlying asset at the option's strike price) before its expiration date, the option simply runs out and any value associated with the option is lost.
Investors deciding whether or not to purchase or sell a particular option typically try to determine if the option is undervalued, overvalued, or fairly priced. Although there may be countless different factors that investors take into consideration when deciding an option's value, there are several factors which the investing community as a whole generally pays close attention to when evaluating options. These factors typically include the strike price and maturity date of the option, the current price and volatility of the underlying asset, the interest rate, and several calculated parameters such as the delta, gamma, rho, theta, and vega of the option.
The delta value of an option is the rate of change in the price of the option with respect to the rate of change in price of the underlying asset. An option's gamma value is the sensitivity of its delta value to a change in the price of the underlying asset. The rho value is the rate of change in the option price with respect to changes in the interest rate. The theta value measures the rate of change in the option price with respect to the time decay of the option. Vega is the rate of change of the option price with respect to the volatility of the underlying stock.
Investors can typically find information about the value of options in financial newspapers, from television and radio programs, and on web sites over the Internet. Nevertheless, these publications and broadcasts do not generally convey many of the important option parameters discussed above. For example, radio and television programs often provide general market conditions, but typically lack specific information about individual investment options. Financial newspapers and web sites are better at covering individual options offered in some markets, however, they typically list only a minimal amount of information about each option, such as its trade price, strike price, expiration date, and trade volume.
One drawback of receiving incomplete information about an option is that an investor may have difficulty determining how a change in the market affects the option's value. For example, without knowing a stock option's delta value, it is difficult to know what impact a change in the underlying stock price will have on the option's value. In addition, providing more market data can help investors recognize patterns and trends of some options. Patterns and trends often provide insight to the future performance of an investment. Thus, by having access to more information about an option, the investor is able to make a more informed decision about the option's value.
Market activity in modern day exchanges is often characterized by fast moving prices and large volumes of trade. A drawback of some conventional information reporting systems is their delay in conveying market data to investors. For example, many financial newspapers typically examine market data from previous trading days and do not contain up-to-the-minute market data. Many web sites offering market data are also delayed by twenty minutes or more. Price swings within such short periods of time can have a significant impact on an option's value, and investors must react quickly to such changes in value. A delay of data can cause an investor to miss advantageous trading opportunities he or she may have otherwise acted upon. Access to current market activity information is therefore critical to many investors trying to secure favorable trades.
As earlier mentioned, an option is a right to purchase or sell its underlying asset at a specified price before the option's expiration date. A person purchasing an option forecasts market activity which will increase the value of the option before its maturity. Current option reporting and analysis methods generally lack an ability to help investors quickly determine if their predictions about the market will cause an option's value to increase. Conventional analysis and reporting systems typically present option data in static form, often only listing numeric values for parameters reported. This static data is represented in static text or tabular form making it difficult to perceive relationships, change, and activity at a glance. Such systems make an option's predicted performance difficult to visualize and compare to other options.
Therefore, there is a need for an improved system and method for reporting and analyzing financial data of investments in a way which avoids the shortcomings and drawbacks of prior art systems and methodologies.